Types of deposits in bank
Some deposits are:
When money is deposit for a fix period and cannot be withdraw before fixed time then it refer as time deposits. Example, fixed deposit. Interest rate is fixed on amount and deposit time. The rate is also varies from bank to bank. For longer period time deposit interest are larger.It is divided into three types:
A fixed rate of interest is paid at fixed, regular intervals. Fixed amount is deposited at regular intervals for a fixed term and the repayment of principal and accumulated interest is made at the end of the term.
Interest is compounded quarterly and paid on maturity, along with the principal amount of the deposit. In the Flexi Deposits amount in savings deposit accounts beyond a fixed limit is automatically converted into term-deposits.
These deposits are usually targeted at persons who are salaried or receive other regular income. A Recurring Deposit can usually be opened for any period from 6 months to 120 months. Banks also provide a combination of demand and time deposits in the form of various products. Examples of such products include Recurring Deposits, Flexible RDs, Multiplier FDs, Special Term deposit accounts etc.
If the funds deposited can be withdrawn by the customer (depositor / account holder) at any time without any advanced notice to banks it is called demand deposit. One can withdraw the funds from these accounts any time by issuing cheque, using ATM or withdrawal forms at the bank branches.
The ownership of demand deposits can be transferred from one person to another via cheques or electronic transfers. There is no fixed term for Demand Deposits. The demand deposits may or may not pay interest to the depositor. Example while we get an interest on savings accounts, no interest is paid on current accounts.
CASA Deposits refers to saving in Current Account. As an aggregate the CASA deposits are low interest deposits for the Banks compared to other types of the deposits. So banks tend to increase the CASA deposits and for this they offer various services such as salary accounts to companies, and encouraging merchants to open current accounts, and use their cash-management facilities.